India's crude oil import price has dropped to below $100 a barrel, first time since April, but a cut in domestic retail prices is a distant possibility given the fact that state-run oil firms are still losing money on fuel sales.
The basket of crude oil India imports averaged $99 a barrel on Tuesday, the lowest level since April 2, a petroleum ministry official said.
It had averaged $96.52 a barrel on April 1 and crossed the $100 mark on April 7.
"The Indian basket of crude oil is lower than the $119 -$120 level at which the June 4 price hike was announced. But even at current levels, companies are still losing money on sale of petrol, diesel, LPG and kerosene," he said.
A cut in petrol and diesel prices may not be economically feasible as Indian Oil, Bharat Petroleum and Hindustan Petroleum are projected to lose Rs 1,65,300 crore (Rs 1,653 billion) on fuel sales this fiscal.
"The government has to make good half of this revenue loss by issue of oil bonds. The Finance Ministry has already taken an over Rs 22,000 crore (Rs 220 billion) hit in revenues by way of duty cuts announced in June and a price reduction at this stage may upset its applecart," the official said.
Retailers are at present losing Rs 6.31 per litre on petrol, Rs 13.69 on diesel, Rs 31.39 on kerosene and Rs 312.58 per 14.2-kg LPG cylinder.
IOC, BPCL and HPCL together are losing about Rs 400 crore (Rs 4 billion) per day on fuel sales, he said, adding that the domestic prices are pegged at $68 per barrel crude price.
The official said the Indian basket of crude oil has averaged $103.33 per barrel, against $113.05 a barrel average of August.
The revenue loss of retailers has to be compensated through a combination of oil bonds and assistance from upstream firms like ONGC.
IOC, the company that controls about 54 per cent of the market, is projected to lose Rs 90,630 crore on fuel sales this fiscal.
The company loses Rs 11 crore (Rs 110 million) per day on sale of petrol, Rs 112 crore (Rs 1.12 billion) daily on sale of diesel, Rs 63 crore (Rs 630 million) per day on kerosene and Rs 32 crore (Rs 320 million) per day on LPG.
Fuel prices in India are pegged at $68 per barrel, much lower than $99 a barrel price of Tuesday.